Missed Nvidia? Here are three other artificial intelligence (AI) stocks to buy instead:

One of the pillars of the artificial intelligence (AI) boom is semiconductors. And when it comes to high-performance graphics processing units (GPUs), members of the ‘Magnificent Seven’ nvidia It’s at the forefront of the discussion. But despite surging demand for the company’s A100 and H100 chips, smart investors realize there are other opportunities with Nvidia.

Considering the stock is up 200% over the last year, it might be worth checking out the competition to find better value. Let’s take a closer look at three of Nvidia’s main competitors and evaluate why each company could be a good buy right now.

1. Intel

Early April, intel (INTC -0.94%) According to Intel, Gaudi 3 has 1.5x faster training and inference capabilities than Nvidia’s H100. Additionally, these chips use 40% less power than Nvidia GPUs, providing significant cost savings to customers.

Although Nvidia holds about an 80% share of the AI ​​chip market, we are cautiously optimistic that Intel will be able to erode its rival’s lead. IT architecture solution providers including: Dell Technologies, hewlett packard enterprise, lenovoand super micro computer — We are planning to design a system that will all use Gaudi 3. And Intel announced that the initial Gaudi 3 customers and partners are: IBM and sap.

Investors were surprised in the company’s first quarter 2024 earnings report, when CEO Pat Gelsinger said he expects revenue to accelerate to more than $500 million in the second half of the year following the launch of Gaudi 3.

Nvidia is still the 800-pound gorilla of AI semiconductors, but it sees Intel’s latest product launch as an encouraging sign and has been impressed by the early success of Gaudi 3. Long term, Nvidia is in high gear.

Image source: Getty Images

2. Advanced micro devices

The second company on my list is Nvidia’s closest competitor. advanced micro devices (AMD -0.17%). Like Intel, Nvidia also has a huge lead over AMD. But this isn’t all good news for Nvidia, whose executives have reminded investors that demand is outpacing supply, creating a bottleneck for new business.

This is an opportunity for your competitors to step in and take advantage. At the end of December, AMD announced the launch of the MI300X accelerator. To date, this is the closest competing chip to what Nvidia offers.

Although it’s still early days, the MI300X launch has been encouraging so far. During the fourth quarter, the company’s data center GPU business exceeded expectations by $400 million, driven by accelerated demand for MI300X. Management also believes that the market size for these chips will reach $400 billion by 2027.

The early success of the MI300X, combined with the enormous market opportunity in data center GPUs, gives AMD a chance to gain some momentum from Nvidia and become a more prominent player in the chip space in the long term.

3. Meta Platform

i will admit it meta platform (meta -0.04%) This might seem like the most unconventional company on my list. In fact, today the company has established itself as a leader in the advertising sector thanks to the large Internet surface area covered by applications such as Facebook, Instagram and WhatsApp.

However, as social media competition heats up, centered around TikTok and YouTube, Pinterest, other metas are showing that impressive cash piles are being used for profitable new opportunities. In the company’s first quarter earnings call, investors learned that management expects $35 billion to $40 billion in capital spending this year. This is a notable increase from prior guidance of $30 billion to $37 billion.

The reason for the increase in facility investment is Meta’s efforts to build its own chips internally. The company’s Meta Training and Inference Accelerator (MTIA) chip could be a gold mine. First, the successful deployment of MTIA will allow Meta to move away from its current infrastructure that uses Nvidia’s H100 chips. This could lead to huge cost savings in the long run because the company will have its own customer chips and be less dependent on Nvidia overall.

A more subtle reason why MTIA may benefit from Meta is that Meta provides a path to internalize as much of the technology stack as possible. The company collects tons of data from various social media platforms, so integrating its own chips into this workload could lead to more efficient operations as Meta continues to seek to hone its targeted advertising capabilities.

We believe the MTIA accelerator could be a huge differentiator for Meta compared to its peers and represent a whole new source of growth for the company.